Gone Are the Glory Days of Steel

February 26, 2013

MINGO JUNCTION - Steelmaking in the Ohio Valley has taken its share of hits over the years - labor strikes, sales, layoffs - but possibly none hurt more than in 2012, when RG Steel, the owner of the former Wheeling-Pittsburgh Steel Corp., declared bankruptcy and auctioned off the local mills.

Gone are the days when 3,000 steelworkers labored in plants in Mingo Junction, Beech Bottom, Steubenville, Yorkville; those plants are now shuttered, their workers out of a job.

The mills all sold, but their fate remains unclear. Esmark Inc., another former owner of the Wheeling-Pitt properties, purchased the Yorkville mill and has a labor contract with the United Steelworkers. The company's initial plans called for a restart of operations early this year, but a soft steel market and other factors have pushed that back to an undetermined date.

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After bankrupt RG Steel sold the idled Steubenville plant to Wheeling-based Herman Strauss Inc. for about $15 million last summer, demolition of part of the structure is under way.

The Steubenville plant went to a subsidiary of Herman Strauss Inc., a Wheeling-based recycling business. Strauss paid $4.3 million for about 103 acres, plus another $10.7 million for the scrap and machinery. The plant currently is being demolished.

At Beech Bottom, home to what once was the highly profitable and successful Wheeling Corrugating Co., a subsidiary of steelmaker Nucor purchased the property with no plans for a restart.

Possibly the only chance for real hope for a new direction in Ohio Valley steelmaking is at the Mingo Junction mill, which houses the once-heralded electric arc furnace.

Frontier Industrial purchased the mill at auction for $20 million. The company currently is being courted by at least one international steel firm interested in the facility, with price being the main hurdle.

USW members are hopeful that Mingo will produce good results for the local area.

"Right now, we are just waiting to see like everyone else," said Ernie Gambellin, the most recent president of United Steelworkers Local 1190, which represents union employees and retirees from the Mingo plant.

Because the mills have been shut down since 2009, Gambellin said the United Steelworkers district headquarters has taken over the leadership duties, thus relieving him of his official position.

Craig Slater, general counsel and vice president for Frontier, has said his company is still working to find investors to help restart the mill. He said this would probably take at least $80 million and about six months of work.

"We are still doing everything we can to get a restart," Slater said. "We are having productive discussions. Everyone has been helpful, from the local level and the state level.

"We feel kind of like a duck. Our feet are moving awfully fast under the water, but you can't see anything moving on the surface."

Slater said if anyone has plans to operate the mill again, a critical component of the business strategy will need to be finding an economical source of energy. He said he engaged in discussions with American Electric Power, as well as the Public Utilities Commission of Ohio, to possibly work out a deal for reduced power rates.

"We have not filed anything yet, but it is a possibility," Slater said of asking for a break on electricity bills. "We hope to have something decided within the next 90 days, but we'll just have to see."

Walking near the huge but quiet Mingo mill conjures thoughts of days gone by when the site flourished with activity.

After nearly four years of inactivity at Mingo, Gambellin said some displaced workers have retired, while others have gone to college or left the area in search of new careers. He said there are about 500 people in place now who are still looking to return to work.

"It is just so much different now," said an Upper Ohio Valley native who didn't want to provide his name. "I can remember when the smoke was so thick you could barely see the place.

"I guess everything changes, though," he added.

One thing that has not changed is the ownership of RG's downtown Wheeling headquarters. The building currently is empty and for sale for $900,000.

RG's pensions are another issue. The federal Pension Benefit Guaranty Corp. has acknowledged it would take over at least some of RG's local pension obligations.

According to the organization's website, the Pension Benefit Guaranty Corp. is "not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over."

The maximum benefit guaranteed by PBGC is adjusted by law annually. For plans that ended in 2010 and 2011, those who retire at age 65 can receive up to $4,500 a month.